- Traditional money launderers increasingly use on-chain money transmission.
- Chainalysis reports the large-scale money laundering infrastructure created by traditional money launderers.
- The majority of transactions in 2024 were valued at $1-$10,000, sparking suspicion.
A recent Chainalysis report highlights the increasing use of on-chain money transfers by traditional money launderers. Kim Grauer, the Head of Research at Chainalysis, identified the “large-scale money laundering infrastructure” created by these criminals.
The Chainalysis report focuses on money laundering stemming from illicit off-chain crimes, distinct from the usual on-chain crypto crimes. The platform stated:
“Our report on money laundering reveals how bad actors now use cryptocurrency to launder funds from off-chain crimes, not just from native cryptocurrency crimes like ransomware. We explore advanced tracking techniques and how blockchain data is driving the against financial crime.”
The analytics platform revealed that these transactions originate not only from wallets belonging to crypto scammers but also from wallets that are not currently identified as illicit. These transactions are done through strategies that could be flagged by traditional financial regulators.
An analysis of exchange transfers in 2024 showed that a majority of the transactions were valued below the $10,000 mark. The $10k point is significant as it is the threshold at which additional know your customer (KYC) verification is mandated.
Though transactions valued at $1-$10,000 are not always of illegal origin, it’s often considered a metric to track down criminal activities. Grauer stated that one of the factors Chainalysis considers before flagging something “suspicious” is the transaction volume.
Notably, the report details the most prevalent forms of money laundering in the crypto world. As per the Chainalysis report, almost 80% of illicit funds pass through intermediary wallets. The other methods employed by the money launderers include mixers, privacy coins, and cross-chain protocols.
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